June 9, 2009

Wells Fargo and the Effects of Institutionalized Racism

Posted by Nina Jacinto at 2:00PM

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The NAACP has filed lawsuits against the Wells Fargo Corp. and HSBC Holdings for their racist lending practices against predominantly black borrowers in the Mid-Atlantic region of the U.S. Some loan officers at Wells Fargo reported systematically targeting blacks for high-interest subprime loans. The company looks to have targeted mostly working class blacks in Baltimore and suburban Maryland, steering even qualified individuals away from prime loans and into the riskiest category of loans available. According to affidavits, employees tossed around racial slurs to refer to black customers, and were encouraged with cash incentives to target black communities for subprime lending.

The city of Baltimore filed a lawsuit against Wells Fargo last year, claiming that the city has suffered greatly as a result of reverse redlining, losing millions of dollars from risky subprime loans and seeing an increase in housing foreclosures and crime in black communities. Predatory subprime loans will further burden these communities for generations and will help maintain the disproportionate wealth gap between people of color and whites in the United States. Hopefully, with the statements provided by some Wells Fargo workers, the Obama administration will reconsider its positionality on racially discriminating banks.

It's easy to see the ways in which institutionalized racism has played a role in the construction and implementation of banking practices. Banks and other companies may claim to hire diverse employees and have a socially conscious business agenda but are often still tied to systems of advantage that help mobilize and benefit whites. Individuals help perpetuate racism through their language, but are also encouraged by their company to assist in reverse redlining and target vulnerable communities. The inequity that plagues people of color remains rooted in systemic racism and damages their communities, their sense of safety, health, and support. We need much more than affirmative action programs to help people of color move up the employment pipeline: we also need to reconfigure the framework through which banks like Wells Fargo operate.